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2016 (2) TMI 513 - ITAT JAIPUR

2016 (2) TMI 513 - ITAT JAIPUR - TMI - Exemption u/s 10B - Disallowance of foreign participation expenses - bifurcation between two units - Held that:- What is to be seen is when the initial deposit was made, whether it was claimed as an expense in the profit and loss account or shown as an advance in the balance sheet. In the instant case as submitted by the ld. AR, the initial deposit was shown in the balance sheet as an advance in the account of Gem & Jewellery Export Promotion Council. There .....

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unts are not determinative of real nature of the transactions. Given that both the units are in the same business and 100% of its production is exported and there was no local sale in unit-I held by the AO, and in absence of any contrary facts brought to our notice by ld. AR, a more logical view which emerges is that the booking of stalls in the exhibition was done for both the units and the expenses should relate to both units. In light of above, we are of the considered view that the AO has ri .....

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d the fact that the said disallowance is in hands of unit-II which is enjoying tax exemption u/s 10B of the Act. We do not like to interfere with the order of the ld. CIT(A). - Decided against assessee - ITA No. 213/JP/14 - Dated:- 13-1-2016 - SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri H.M. Singhvi (C.A.) For The Revenue : Shri Raj Mehra (JCIT) ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of CIT(A)- I, Jaipu .....

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rief facts relevant for the matter under consideration are that the assessee, which is in business of manufacturing and trading of previous and semi-precious stones and studded Diamond jewellery, is having two units, unit-I and unit-II. The unit-II is 100% Export Oriented Unit (EOU) which is eligible for exemption u/s 10B of the Act. During the year under consideration, the assessee has debited an amount of ₹ 5,36,228/- towards Foreign Exhibition Participation expenses in the profit and lo .....

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sing the taxable income in Unit-I. Accordingly, he worked out the proportionate expenses in hands of unit-I and unit-II which has resulted in disallowance of ₹ 4,31,395/- in hands of unit-I and corresponding addition of ₹ 4,31,395/- in hands of unit-II. The addition of ₹ 4,31,395/- in hands of unit-II is being contested before us. 2.1 During the course of hearing, the ld. AR submitted that the assessee firm paid a sum of ₹ 9,45,000/- for booking of 2 stalls for participat .....

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y else and money was refunded. However, it refused to pay the booking amount of booth No. 44103 as per the cancellation policy and as such the amount of ₹ 5,36,228/- represented the cancellation charges of booth No. 44103. 2.2 The ld. DR is heard. 2.3 We have heard the rival contentions and perused the material available on record. Firstly it is noted that the amount of ₹ 5,36,228/- which has been debited in the profit and loss account of unit-I relates to cancellation of participati .....

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in its books of account should be allowed to claim the loss on a/c of cancelling charges where the assessee has not been able to participate in the exhibition. However, what is to be seen is when the initial deposit was made, whether it was claimed as an expense in the profit and loss account or shown as an advance in the balance sheet. In the instant case as submitted by the ld. AR, the initial deposit was shown in the balance sheet as an advance in the account of Gem & Jewellery Export Pro .....

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